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2023 (3) TMI 800 - HC - Central ExciseExemption from excise duty in regard to supplies of high speed diesel (HSD) manufactured and supplied by BPCL - Withdrawal of benefit of Notification No. 108/95 CE dated 28.08.1995 by virtue of a subsequent Notification bearing No.10 of 2017-Central Excise dated 30.06.2017 - Government is satisfied that such withdrawal of exemption was warranted in public interest - case of petitioner is that the exemption ought not to have been withdrawn during the currency of the agreement between the petitioner and TNRSP - second case of petitioner is that the Government cannot merely cite 'public interest' but must be able to establish what the specific circumstances of public interest were, that justified such withdrawal. HELD THAT - The case law cited by the petitioner being Birla Corporation 2019 (12) TMI 61 - SUPREME COURT would be distinguishable for the reason that in that case the exemption notification had been issued and thereafter withdrawn even prior to the date of grant of the exemption. In the case of Unicorn Industries 2019 (9) TMI 791 - SUPREME COURT , the three Judge Bench of the Hon'ble Supreme Court considered the similar question as to whether the withdrawal of an exemption notification would result in the benefit of the argument of promissory estoppal being available to the petitioner - Upon consideration of several judgments that have been rendered earlier, Kasinka Trading Vs. Union of India 1994 (10) TMI 64 - SUPREME COURT , Sales Tax Officer Vs. Shree Durga Oil Mills 1997 (12) TMI 114 - SUPREME COURT , Shree Durga Oil Mills vs. Sales Tax Officer 1987 (9) TMI 407 - ORISSA HIGH COURT , Shrijee Sales Corporation Vs. Union of India 1996 (12) TMI 61 - SUPREME COURT , Motilal Padampat Sugar Mills Co. Ltd. Vs. State of U.P. 1978 (12) TMI 45 - SUPREME COURT , State of Rajasthan Vs. Mahaveer Oil Industries 1999 (4) TMI 523 - SUPREME COURT , Shree Sidhbali Steels Ltd., Vs. State of U.P. 2011 (1) TMI 1248 - SUPREME COURT Directorate General of Foreign Trade Vs. Kanak Exports 2015 (11) TMI 80 - SUPREME COURT , the Court concluded that the modification or withdrawal of a notification in public interest would fall fully within the domain and discretion of the, public authorities, that is, either the Government or revenue authorities. No assessee can claim an exemption as a matter of right. No doubt, in this case an exemption had been granted in respect of duty liability in respect of those projects that have been funded by the World Bank and the assessees had been availing the benefit of this exemption from 1989 onwards. As far as the demand relating to the period post 01.07.2017, BPCL appears to have threatened the petitioner that it would invoke a bank guarantee that was in its possession though unrelated to the present contract - While the petitioner would deplore the action of BPCL in making such a threat, ultimately the payment has been effected by the petitioner to BPCL suo motu and has not been recovered by BPCL by invoking bank guarantee. This aspect of the matter is left as such, without comment except to state that the amount as above shall remain in the possession of BPCL till a final demand is raised by the Customs Authorities - petition disposed off.
Issues Involved:
1. Validity of the demand for excise duty for the period before the withdrawal of exemption. 2. Legality of the withdrawal of the exemption notification. 3. Interpretation of the contract terms regarding the change in law. 4. Liability determination between the contractor and TNRSP. Issue-wise Detailed Analysis: 1. Validity of the demand for excise duty for the period before the withdrawal of exemption: The petitioner challenged the demand for excise duty for the period from March 2016 to June 2017. The court held that the impugned notification dated 30.06.2017, which withdrew the exemption, comes into effect only from 01.07.2017. Therefore, any recovery of duty for the period prior to 01.07.2017 is deemed bad in law and must be refunded to BPCL. BPCL is instructed to appear before the Central Excise Officer for reconciliation, and the amount should be refunded within two weeks from the reconciliation date. 2. Legality of the withdrawal of the exemption notification: The petitioner argued that the withdrawal of the exemption during the currency of the agreement was unlawful and that the government must establish specific public interest circumstances justifying such withdrawal. The petitioner cited the Supreme Court judgment in the case of State of Uttar Pradesh vs. Birla Corporation Ltd. However, the court accepted the revenue's stand, distinguishing the Birla Corporation case. The court noted that the withdrawal of the exemption in 2017 was within the government's discretion and justified by public interest. The court cited several Supreme Court cases, including Union of India vs. Unicon Industries, to support the view that the government has the discretion to grant, continue, or withdraw exemptions. The challenge to the notification dated 30.06.2017 was thus rejected. 3. Interpretation of the contract terms regarding the change in law: The contract between the petitioner and TNRSP included a clause (Article 19.17) addressing changes in law. This clause stipulated that any additional costs or benefits resulting from a change in law should be notified and reconciled between the parties. The court noted that the parties were aware of the possibility of changes in law, supported by the issuance of a public trade notice regarding the reversal of the exemption. The court refrained from interpreting the contract terms, leaving it to the parties to resolve the impact of the change in law through representation and discussion. 4. Liability determination between the contractor and TNRSP: The petitioner was permitted to make a representation to TNRSP regarding the interpretation of the exemption notification and the consequent liability. The court instructed TNRSP to act upon this representation, calling upon the petitioner to appear and pass orders accordingly. The Central Excise Department was directed to determine the refund or additional demand based on the amounts collected from BPCL and paid by the petitioner to BPCL. The court also addressed the issue of BPCL's demand for the period from 2015 to 2018, reiterating that there should be no demand for the period before 01.07.2017. The court noted that the petitioner had paid BPCL suo motu and the amount should remain with BPCL until a final demand is raised by the Customs Authorities. Conclusion: The writ petitions were disposed of in light of the above orders, with no costs, and connected miscellaneous petitions were closed.
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